5 Big Retailers That’ll Be Gone in 5 Years

Jeff Macke

Pop quiz: Which public company had the highest market capitalization of all time when adjusted for inflation? Here's a hint, it shares the same fate as Borders, Woolworth, Circuit City and Blockbuster. In other words, it went bankrupt and disappeared taking loyal shareholders' money with it.

Before I give you the answer, it's time for a hard fact: Companies are no different than dogs, grandparents or houseplants; they're born, they live and eventually die. There are no exceptions.

The answer to the quiz is The Dutch East India Company. Formed in 1602 to carry out colonial activities for the Dutch government, its stock was valued at over $7.4 trillion at the height of the tulip bubble in 1637. In 1798 the company went bankrupt and was officially dissolved two years later.

In the attached video Brian Sozzi, CEO of Belus Capital Advisors, runs through five retailers that are household names today but will be non-existent five years from now.

1. J.C. Penney (JCP)

It's become fashionable to pick on Penney's lately. (In fact, this may be the first time the word "Penney's" and "fashionable" have been used in the same sentence since the late 1970s.) Sozzi says JCP's decision to fire ex-Apple retail head Ron Johnson and bring back former CEO Myron Ullman will only speed up their inevitable demise.

As fast as Johnson was running through JCP's cash with his ambitious remodel plan, it's going to be almost as expensive to undo it. Half of Penney's stores are in the various stages of being gutted and about 500 stores haven't seen a paint brush in years. To bring the two versions of JCP together is going to cost a fortune and confuse customers even more.

"It's going to get worse," says Sozzi, adding that the stock will ultimately move "in one direction — down."

2. Staples (SPLS)

Sozzi thinks Staples is a victim not so much of ineptitude but changing times. Tablets, emails and texts have finally reached the long awaited point at which they've obviated the need for an office supply store down the street.

The products people need to help them work at home (printer paper, ball point pens, etc.) are available at every merchant in town, and more exotic products can be ordered online and delivered in record time. Staples has a robust online presence, but nothing so great that a company like Amazon (AMZN) could not destroy it on a whim.

Staples' most obvious way to escape its death spiral would be to expand internationally. Unfortunately history hasn't been kind to even the best retailers trying to tap foreign markets. As dim as Staples' prospects are domestically staying home gives the company a better shot at survival than a cash-draining attempt to go global.

3. Sears (SHLD)

It may be impossible for most to remember, but Sears was once the "go to" merchant for almost anything. The Amazon of its time, Sears was the first retailer to make it easy for customers to shop from home via its once iconic catalog.

That was a long time ago. Sears has been on a steep slide for ages, held together by little more than the will and imagination of billionaire investor Eddie Lampert. As a merchant, Lampert makes an amazing hedge fund manager.

"Here's a fast fact," offers Sozzi, "the domestic same-store sales have been down for seven straight years." The slide is inexorable. Sears stores will disappear, and the company will be chopped into pieces.

4. Radio Shack (RSH)

Despite still having thousands of stores, RadioShack embodies an idea that is behind the times. They've tried almost everything to maintain a place in America's shopping habits, but there just isn't that much need for speaker wire, knock-off remote controlled toys or another cell phone seller.

RadioShack is "a little, small store of product deflation," Sozzi notes. Everything in the stores, except perhaps the batteries, once cost more than it does today. It's somehow encouraging that a handheld robot with almost no functionality can be had for less than it cost 20 years ago, but there's no margin in such toys and gadgets.

5. Barnes & Noble (BKS)

Say it isn't so! The last of the major physical book retailers had one shot at relevance, Sozzi says. That was in the form of the Nook, a would-be competitor to the iPad and Amazon's Kindle.

Barnes & Noble's "big idea" was that people who had a Nook could be driven into stores, where customers would congregate to enjoy each others' company and perhaps buy a cup of high-margin coffee and a few magazines.

Instead, Nook sales have dwindled to the point that the company can no longer afford to pursue what little opportunity there may be for a third-place offering in the tablet arena. Sozzi says Barnes & Noble giving up on the Nook eliminates its long-term chance of survival.

If any of these stores are still here in five years, they'll either be a museum or a privately-held vanity property for founder Leonard Riggio.

Which stores do you think will go bust? Let us know your thoughts in the comment section below or visit us on Facebook!


View Comments (3750)

Recommended for You

  • Jack Ma of Alibaba becomes China's richest person

    The largest stock offer in history has made Jack Ma, founder of e-commerce giant Alibaba, China's richest person with a fortune of $25 billion, an annual wealth ranking in the world's second largest economy showed Tuesday. "It has been an amazing year for China's best tycoons despite the jitters…

  • Want a Career Change in Education? Earn your M.Ed.

    A Master of Education degree can help you launch a new career as a school administrator, curriculum director and more. Why wait? Apply to GCU!

    AdChoicesGrand Canyon UniversitySponsored
  • Cadillac to ditch Detroit for trendy NYC address

    Cadillac wants a jolt from the city that never sleeps. General Motors' 112-year-old luxury car division, founded in Detroit and named for the city's founder, is moving its headquarters to New York. Cadillac, which has been steadily losing sales to its German rivals, wants to get closer to its ideal…

    Associated Press45 mins ago
  • U.S. SEC to pay $30 million-plus in largest whistleblower award

    By Sarah N. Lynch WASHINGTON (Reuters) - An anonymous tipster living abroad will be receiving more than $30 million, in the largest whistleblower award ever doled out by U.S. The Securities and Exchange Commission said on Monday that the whistleblower provided crucial information that helped…

  • Bill Ackman's Big Takeover Deal May Be Spinning Out Of His Hands, And He's Threatening To Sue

    For months Bill Ackman has been working with the pharmaceutical company Valeant to acquire its peer, Allergan. "We have read published reports that you are negotiating a substantial highly leveraged acquisition that would not require shareholder approval in an attempt to preclude a transaction with…

    Business Insider
  • Apple sells more than 10 million new iPhones in first three days

    Apple Inc said it sold more than 10 million iPhones in the first weekend after its new models went on sale on Friday, underscoring strong demand for phones with larger displays. Chief Executive Tim Cook said the company could have sold even more iPhone 6 and iPhone 6 Plus models if supplies had…

  • Stocks Fall For Third Straight Day — Dow Down 100

    Stocks were lower for the third straight day on Tuesday, with the Dow leading losses, falling about 100 points or 0.6%.  The S&P 500 was down 10 points, and the Nasdaq was down 17 points. The Richmond Fed's manufacturing index also beat expectations.

    Business Insider
  • Indiana toll-road operator files for bankruptcy

    The debt-stricken operator of an Indiana Toll Road filed for bankruptcy protection Sunday with a plan to restructure some $6 billion in debt by selling its assets or reorganizing its business. ITR Concession Co. LLC filed for Chapter 11 protection with a prepackaged plan — meaning a sufficient…

  • New Site Releases Everyone's Past Online!

    A new site has made it simple to find the truth out about anyone's Past online. It's as easy as typing in a Name and selecting a State!

    AdChoicesInstant CheckmateSponsored
  • Wall Street Has A New Worry Now That The Economy Is Recovering

    Business Insider is at the annual Bloomberg Markets Most Influential Summit on Monday, and this year  guest after guest has talked about the same worry. Early in the conference Carlyle CEO William Conway, hedge fund legend Julian Robertson, and William Dudley CEO of the Federal Reserve Bank of New…

    Business Insider
  • Gold crashes and is now tarnished for good

    Gold shined brightly at the beginning of 2014, with bullion prices jumping by about 13% from New Year’s Day until mid-March. Last week, the precious metal settled near lows not seen since Christmas 2013.

  • 5 Giant Myths Of Retirement Planning

    The world of retirement planning is no different. It’s been more than two decades since retirees could comfortably consider retiring off the interest they earned at the bank. If not, you’ll find yourself living a life of scarcity when your retirement life could be filled with abundance.

  • One Apple supplier may not get a pop from the iPhone 6

    The iPhone 6 has been a smashing success for Apple. This past weekend, Apple reported selling an astounding 10 million iPhone 6 and iPhone 6 Plus smartphones. Investors hoping to be clever about the news may consider buying shares of SanDisk, the flash memory maker that is an important supplier to…

    Talking Numbers
  • Billionaire Fredriksen Boosts Seadrill Stake After Shares Drop

    Billionaire John Fredriksen boosted his stake in rig company Seadrill Ltd. (SDRL) after the stock dropped on a market downturn, a longtime adviser left, and amid uncertainty over a Russian deal. Fredriksen’s Hemen Holding Ltd. yesterday bought 2 million shares in the world’s biggest offshore-rig…

  • UBS Sees 4 Companies as Potential MLP Acquisition Targets

    Once a major company with the size, depth and, most of all, deep pockets like Kinder Morgan Inc. (KMI) plunges in and makes a huge deal come together with pending acquisitions, all you need is a quote from the CEO Rich Kinder like “Fertile field to do a little grazing in” and you have sparked a…

    24/7 Wall St.
  • Bring Back the Awesome with a Bowl of Froot Loops®

    Who Says You Have to be a Kid to Enjoy the Great Taste of Froot Loops®? Follow Your Nose to the Sweet Aroma and Fruity Goodness of Froot Loops Today!

    AdChoicesKellogg's Froot Loops®Sponsored
  • Next up after Alibaba: Biggest bank IPO ever

    Investors will get a little time to catch their breath after Friday's record-breaking Alibaba trading debut, but not too long. On the heels of what is the largest initial public offering on record, Wall Street will be asked to digest what could be the largest bank or thrift IPO ever-the expected…

  • US cracks down on companies moving overseas

    The Obama administration cracked down Monday on certain overseas corporate mergers and acquisitions, aiming to curb American companies from shifting their ownership abroad to shirk paying U.S. New regulations from the Treasury Department will make these co-called corporate inversions less lucrative…

    Associated Press
  • After big gains, stocks Cramer would avoid

    If you're looking at these stocks due to chatter of a super-cycle, Jim Cramer thinks you'll come to regret it. Because sand is such an important part of fracking , a relatively new drilling process that's made formerly hard to reach deposits of oil (New York Mercantile Exchange: @CL.1) and natural…

  • Argentina's Fernandez meets billionaire investor Soros in New York

    Argentine President Cristina Fernandez met on Monday with Argentina bondholder and billionaire financier George Soros, who is suing a U.S. A spokesman for Soros said they had discussed topics including the energy sector.

  • Ruble Falls on Brent Decline, Fed Concerns: Russia Reality Check

    Markets are reacting in real time to tension in Ukraine following Russia’s March incursion into Crimea and subsequent annexation of the Black Sea peninsula. The Micex Index fell 1 percent to 1,417.46 at 12:44 p.m. in Moscow, giving a loss since Feb. 28, the day before President Vladimir Putin ’s…

  • Clorox exits Venezuela citing govt restrictions

    Clorox is shutting down all operations in Venezuela, citing restrictions by the government, supply disruptions and economic uncertainty. The consumer products company said that for almost three years its affiliate, Corporación Clorox de Venezuela S.A., had to sell more than two-thirds of its…

    Associated Press
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

  • Divorce? The 6 worst money mistakes

    During a divorce, a spouse who hasnâ t shown much interest in the familyâ s finances can often be at a disadvantage during settlement negotiations. The following six items are often overlooked as part of the settlement process, but theyâ re vital areas to address: 1. Cash flow needs